EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0800659
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Melbourne Water Corporation applied for a TCO in respect of certain water pumping plant on 11 January 2008.
Instrument
TCO No 0800659 was made on 04 April 2008. It declares that those certain water pumping plant are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is free.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 0800659 is taken to have come into force on 11 January 2008.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Customs Act 1901, enacted by the Commonwealth Parliament, establishes a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. The problem addressed by this Act is the facilitation of tariff concessions for certain goods that are not produced domestically, thereby potentially reducing import costs and encouraging trade. The objective of the Act, as evidenced by the explanatory statement, is to provide a mechanism through which specific goods can be subject to lower rates of customs duty if they are not produced in Australia and if no suitable domestic substitutes exist. In response to an application from Melbourne Water Corporation, TCO No. 0800659 was issued on 4 April 2008, declaring that certain water pumping plant are subject to a zero rate of duty as they are not produced domestically and no suitable substitutes are available. This concession is effective from the date the application was lodged, 11 January 2008, and does not affect any existing rights or impose new liabilities on individuals or entities other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to individuals or entities seeking to import goods that may be subject to a tariff concession, whereby a lower rate of customs duty is applicable if the conditions set forth in the Act are met. The TCO mechanism aims to facilitate the importation of goods that are not produced in Australia or are not substitutable by locally produced goods. A TCO application can be initiated by any person, provided the goods in question are not specified in section 269SJ of the Act, which lists goods that are ineligible for tariff concessions. The CEO assesses whether the application meets the core criteria, primarily whether substitutable goods are not produced in Australia at the time of application, as outlined in sections 269C and 269F of the Act. Once a TCO is issued, it grants the specified goods a reduced duty rate, as seen in the case of Melbourne Water Corporation’s application for certain water pumping plant, which was granted a TCO on 4 April 2008, setting the duty rate at free compared to the general rate of 5%. This TCO, effective from 11 January 2008, does not affect pre-existing rights or impose any liabilities on entities other than the Commonwealth.
Key Provisions
The main operative sections of the Customs Act 1901, as amended by the Tariff Concession Instrument No. 0800659, involve the process and criteria for issuing Tariff Concession Orders (TCOs) to reduce customs duty on certain goods. Section 269F outlines the application process for a TCO, where a person can apply to the Chief Executive Officer of Customs (CEO) for a concession. The CEO must then assess whether the application meets the core criteria (section 269C), which include determining if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (sections 269B and 269D). If the application meets these criteria, the CEO must make a written order (section 269P(3)) declaring that the goods are subject to a prescribed tariff concession.
The obligations and requirements imposed by the Act on the parties or entities it governs include the application process for a TCO, which involves lodging a valid application with the CEO. The CEO has the responsibility to assess the application against the core criteria and, if satisfied, to issue a TCO. Melbourne Water Corporation's application for a TCO for certain water pumping plant involved demonstrating that no substitutable goods were produced in Australia. Once the CEO determined this, a TCO was issued, reducing the duty rate on the specified goods from 5% to free. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any person who might oppose the TCO, although no such submissions were received in this case.
The legislation also includes provisions for offences, penalties, and consequences for breach. While the Customs Act 1901 does not specify detailed penalties for failure to comply with the TCO requirements, breaches of the Act generally attract criminal or civil penalties. These can include fines, imprisonment, or both, depending on the nature and severity of the offence. The specific penalties would be determined by the relevant sections of the Customs Act 1901 and any applicable regulations, but the maximum penalties for serious breaches of customs legislation can be substantial. The Tariff Concession Instrument No. 0800659 itself does not detail specific penalties but implies adherence to the overarching provisions of the Customs Act 1901.